Michigan stands at the threshold of pivotal reform that could easily save its taxpayers $10 billion by the end of this decade.

The state Senate has already acted in support of legislation that would close the chronically underfunded "defined benefit" school pension system to new employees starting in 2013. Indications are that Gov. Snyder would support this. Current public education employees would still be covered under the existing system.

This transformational reform would be wholly consistent with a 1997 measure that did the same for new state employees, providing them with a 401(k) "defined contribution" pension plan. (Public school workers were not included in the 1997 reform, although Gov. John Engler had tried to do so.) 

Such reforms are essential if Michigan's public sector is ever to achieve an economic status consistent with real-world dynamics, and if our state ever hopes to have a public sector whose compensation and benefit costs are affordable to taxpaying firms and individuals across Michigan's private sector.

Bond and credit ratings for Michigan and its local units of government will improve once this reform is enacted. This is because, as years roll by, it adds predictability, transparency and financial viability to public employee "legacy costs."

Financially and economically, this reform legislation is an essential measure for restoring Michigan to nationwide pre-eminence.

David L. Littmann is senior economist with the Mackinac Center for Public Policy, He retired from Comerica Bank in early 2005 as senior vice president and chief economist after a 35-year career in charge of Comerica’s Economics Department and Research Library. He also served as chairman of the Economic Advisory Committee of the American Bankers Association in Washington, D.C., where he met regularly with governors of the Federal Reserve Board.

As teachers in the same school district, Craig and Laura Beach have a combined 47 years at Rockford Public Schools.

According to the teachers’ union contract, the two would make a combined $140,000 a year working in a city where the median household income is $57,422.

Craig is a high school teacher with 23 years of experience and his wife Laura has 24 years of experience and is an elementary school teacher, according to what Craig Beach recently posted in his op-ed on MLive.

If the teaching couple retired with 25 years of experience, their combined pensions would be about $52,000 a year. The Michigan Public School Employees Retirement System will provide health care coverage into retirement as early as age 46 if they qualify.

Yet, Craig Beach is unhappy with the “scorn” his profession is allegedly feeling from the Republican Party as well as the compensation of teachers. He wrote that he and his wife are committed that their children not become teachers.

“... My wife and I are adamant that this will never be the heritage of our own three children,” he wrote. "For the first time in my service to our future leaders, I have come to the realization that I would never want my children to enter the education profession. My father, mother, sister, wife and I all have advanced college degrees. In total, the five of us have approximately 36 years of college. My children will use their college degrees for a profession that is not the target of scorn of the Republican Party.

"Would you encourage your son or daughter to devote an advanced college degree to this profession?" he wrote.

Tina Dupont, who has a Rockford mailing address and is a member of the Tea Party of West Michigan, said teachers are paid well and if they "love teaching, pay and benefits should be a secondary worry."

"Teachers today make more money than most of the parents who drop off their kids. They get many days off for Christmas, spring break, summer, etc. Most days they can leave with the children when the final bell rings and actually beat them home since they don’t have to ride the bus," DuPont said. "They‘ve not been paying much for the health care or retirement. … The rest of us have been doing this for years and paying for theirs. So now when the tax payer who pays his salary and benefits can no longer afford to be so generous, he has the gall to whine about it. What Mr. Beach does not realize [that] they ... also get more generous benefits than any I’ve ever seen in my or my husband’s career."

Rockford teachers were offered a health insurance plan with the school district paying 100 percent of the premium. That was changed in the latest contract that was effective Sept. 1, 2011 and teachers currently pay 18 percent of their health care premium.

A teacher with 24 years of service and a master's degree working at Rockford Public Schools earns $71,832 a year. A teacher at Rockford with 23 years of service with a master’s degree would make $70,189, according to the union contract. If a teacher worked 25 years and retired from Rockford, the annual pension would be an estimated $26,320. By contrast, in 2008, the median pension for the private sector was $7,584, according to the Congressional Research Service.

Beach didn’t respond to a request sent to his school email address seeking comment.